Gov. Haslam signs grocery tax reduction into law

NASHVILLE, Tenn. (AP) -- Republican Gov. Bill Haslam has signed into law a reduction in the state's sales tax on groceries.

Starting on July 1, Tennessee shoppers will pay a 5 percent sales tax on retail food items. That's a reduction from the current 5.25 percent tax, and down from 5.5 percent in the previous budget year.

The regular sales tax is 7 percent, while local governments can add an additional tax of up to 2.75 percent.

The reduction in the sales tax on groceries was part of Haslam's legislative agenda, and was approved in tandem with cuts to the state's taxes on inheritances, gifts and income from interest and dividends.

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